Legislators say state needs to be cautious on minimum wage

February 26, 2013

MARSHALL - It's been 13 years since the state of Minnesota has seen its minimum wage rate go up, but it very well could happen in 2013.

A Minnesota House panel opened discussion of a probable hike to the floor wage Monday by reviewing presentations on the economic impact of the minimum wage. The same committee could take public testimony Wednesday. With many DFLers in support of a minimum wage increase, having a Democratic majority in both the House and Senate means the odds are good of an increase becoming a reality.

A minimum wage boost has the support of DFL Gov. Mark Dayton; President Barack Obama, meanwhile is promoting a federal minimum wage increase to $9 per hour.

District 17 DFL Sen. Lyle Koenen of Clara City also supports a hike in the state's minimum wage but thinks the state should take a cautious approach.

"We are behind the federal rate, so I do think it should be adjusted, but I also think we need to be careful not to jump way out there with how much we increase it by. I think we need to be careful; a big, fast move could be quite a jolt. We should do a smaller approach so everything has time to adjust."

Minnesota's minimum wage is currently $6.15 per hour, though many workers automatically receive the higher federal minimum of $7.25 per hour. The House Labor, Workforce and Regulated Industries Committee plans to vote Thursday on a bill that would increase the floor wage in three steps until it reaches $10.55 in August 2015. After that future increases would be tied to inflation, which would automatically boost it without legislative votes.

Koenen says the challenge in the minimum wage issue lies in making sure businesses, especially smaller, Main Street ones, will be able to absorb the extra costs that would come with having to pay their workers more.

"There are two sides to the story - you have people, some of who have two minimum-wage jobs, who are trying to make ends meet and that can be very difficult, and then you have the businesses," he said. "Some can absorb it better than others, but for others it could be quite a challenge. On the other hand, if those workers do get an increase, that money could flow right back into the economy, so some of these very businesses that have to pay that could see a little bump."

District 16 Sen. Gary Dahms, R-Redwood Falls, a minority lead on the Jobs, Ag and Rural Development Committee, is taking an even more cautious approach to the issue. He says workers like college students could come out on the losing end if the minimum wage is increased because a hike could force businesses to cut back on staff. Same with internships.

"There are so many different parts to this bill, so many moving parts; I think people are assuming a change in the minimum wage will change a lot of things, but I don't see it helping employees or the business community," Dahms said. "Am I saying I don't think people should be paid a reasonable minimum wage? I'm not saying that at all, but if a minimum wage change in a particular industry changes the number of jobs that are available, that can make a difference. In some industries, I can see this change the number of jobs they're going to have."

Dahms said legislators must be aware of any possible repercussions a minimum wage hike would have before voting on an increase. One option, he said, would be for the state to adopt the federal wage program.

District 22A Rep. Joe Schomacker, R-Luverne, said as a small business owner, he looks out for his employees as best he can and understands minimum wage employees would like to bring home an extra $2 or $3 an hour more but isn't sure if undergoing a drastic change in policy is in the state's best interests when it comes to creating more jobs.

"The studies that have been produced that say it would be a positive thing for our economy were part of the old economy; since 2008 we've been part of a new economy," he said. "I don't think we have the data out there that shows this would necessarily be a good thing in our new realm. I have some major concerns for our businesses that are still trying to recover from the old economy."